Senate bill adds to growing list of digital asset legislation moving through Congress

U.S. Senators Mitt Romney (R-UT), Mark R. Warner (D-VA), Mike Rounds (R-SD), and Jack Reed (D-RI) have proposed legislation aimed at sanctioning foreign entities that facilitate financial transactions, including digital asset transactions, with Foreign Terrorist Organizations (FTOs) designated by the U.S.

The bill, titled the Terrorism Financing Prevention Act, is a response to the increasing role of digital assets in financing terrorism, exemplified by Hamas’s recent attacks on Israel. It seeks to expand the Treasury Department’s resources and authority to counteract emerging threats from digital assets and hold foreign financial institutions, including crypto firms, accountable for their relations with FTOs.

The proposed legislation outlines several key measures to prevent FTOs from accessing U.S. financial institutions and digital asset systems. These include the obligation for the Treasury to identify foreign financial institutions and digital asset facilitators that have knowingly conducted significant transactions with FTOs or related parties. Following identification, sanctions would be imposed, either restricting the use of U.S. correspondent bank accounts or barring digital asset transactions with U.S. persons.

The legislation includes two exceptions allowing flexibility on national security issues and trade. A waiver provision enables the Treasury Secretary to suspend sanctions under the Act deemed in U.S. national interest but requires Congressional notification. Additionally, sanction authority excludes the importation of physical goods, avoiding unintentional economic impact. The exceptions permit case-specific sanction waivers benefiting national security and continuous physical goods trade.

Long time coming

Congress is actively considering several bills aimed at regulating the burgeoning cryptocurrency and digital asset market. These legislative efforts reflect a growing concern among lawmakers about the need for a comprehensive framework to govern digital currencies and related activities.

One of the key proposals is the Financial Innovation and Technology (FIT) for the 21st Century Act of 2023, sponsored by Representatives Glenn Thompson (R-PA) and Dusty Johnson (R-SD). This bill seeks to redefine the regulatory boundaries for digital assets by categorizing them based on blockchain technology, distinguishing between centralized and decentralized blockchains.

The bipartisan Responsible Financial Innovation Act of 2023, known as the Lummis-Gillibrand bill, is another major initiative. Introduced by Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), it proposes to maintain the application of the Howey test to digital assets, delineating the oversight roles of the SEC and CFTC in the digital asset market.

The Digital Asset AML Act, reintroduced by Senators Elizabeth Warren (D-MA), Roger Marshall (R-KS), Joe Manchin (D-WV), and Lindsey Graham (R-SC), focuses on extending Anti-Money Laundering (AML) provisions of the Bank Secrecy Act to cryptocurrencies. This bill aims to increase transparency and prevent illicit transactions in the digital currency space.

The Financial Technology Protection Act of 2023, introduced by Senators Ted Budd and Kirsten Gillibrand, is led in the House by Representatives Zach Nunn (R-IA) and Jim Himes (D-CT). This bipartisan bill, previously passed in 2018 and 2019, establishes a group to combat terrorism and illicit financing using financial technologies, including digital assets. It focuses on enhancing anti-money laundering measures and requires annual Congressional reports on its findings and strategies to counteract the misuse of digital assets by foreign entities.

Lastly, the Clarity for Payment Stablecoins Act of 2023, introduced by Representative Patrick McHenry (R-NC), is tailored to regulate the issuance of stablecoins. The bill outlines specific requirements for banks issuing stablecoins, focusing on safeguarding deposits, reserves, and liquidity.

These legislative efforts, coupled with the latest bill submitted on December 7, indicate a concerted effort in Congress to establish clear guidelines and oversight mechanisms for the rapidly evolving digital asset industry. However, given the number of steps that remain for each, any new legislation from Congress is a long way from becoming law.

The post Senate bill adds to growing list of digital asset legislation moving through Congress appeared first on CryptoSlate.